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[Anilda Pena]

We set up a purchase automatic charge that is added to the inventory cost at the time of product receipt which works as expected.  However, we found that when we do an inventory transfer from our main warehouse to our other location using a transfer order, the inventory cost for the items being transferred does not include the automatic charge.    We use WMS at our main warehouse and we use moving average costing method. 

Example:
Item 12345
Quantity 2 
Purchase price $??32.29/unit  = Net amount 32.29*2 = 64.58
Our charge $60.00/unit  = total charge 60*2 =120.00
Total amount on PO (inventory cost)- 184.58

We transfer qty 1 
Inventory cost at the transfer warehouse shows $32.29  (we expect inventory cost at $92.29 ($32.29+60.00)

When we sell the item we show a larger margin because the inventory cost does not include the charge.  
Sales order
  Sales price $126.26 inventory cost $32.29 = Est profit $93.97. In actuality, it should be $33.97. 

Does anyone have any thought on why the inventory cost at the time of sales order does not pick up the correct inventory cost? 

Thank you, 
Anilda Pena

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Anilda Pena
Sr. IT Business Analyst
Omniparts Automotive
Franklin TN
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[Arush Kuthiala]

Hi Anilda

How are you adding the charge, is it using standard charges on the PO? Also what does the cost say if you were to sell out of the first warehouse?

Thanks,

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Arush Kuthiala
Western Computer
Toronto ON
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[Anilda Pena]

Hi Arush,

Yes we have setup automatic charges which gets added to the PO when criteria is met.   The cost shows $92.29 when I create sales order out of the first warehouse.  Perhaps the balance $60.00 will be recalculated when we do inventory close and recalculation.  

Thank you,
Anilda 

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Anilda Pena
Sr. IT Business Analyst
Omniparts Automotive
Franklin TN
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[Karim BELHEDI]

Anilda,

if you want that the cost of the item include the charge of the transfer, you have to do a customisation. it isn’t in standard flow.

Karim BELHEDI
SPX CONSULTANT
TUNISIA

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Karim BELHEDI
spx
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[Steve Carter]

Hi Anilda,

Unfortunately, the issue is that transfer orders don’t allow adding charges to item cost. So the cost you see of $32.29 after the transfer is the current cost (assuming there was no other inventory there at a different cost before the transfer) for that warehouse. I’m also assuming you are costing at the warehouse level. So the cost on the item on your Sales order is only the current cost ($32.29). Since you’re using moving average cost method, there would be no inventory close to make any changes either (moving avg changes happen in real-time).

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Steve Carter
PCS Senior Consultant
Blue Horseshoe
Carmel IN
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[Anilda Pena]

Steve,

I misspoke, we use Weighted avg. as our inventory model and run recalculations at the end of each month.  Our inventory cost includes the charge which is added at the time of product receipt.  I am curious where does the inventory cost derive from on a transfer order? 

Thank you for your input.

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Anilda Pena
Sr. IT Business Analyst
Omniparts Automotive
Franklin TN
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[Steve Carter]

Hi Anilda,

Thanks for the info on the correct costing method of moving average. That may make a difference. Can you also confirm these config questions?

 – Are both warehouses in the same site?
 – Are you costing at the warehouse level?
 – Is the charge code set to debit the Item, rather than Ledger?
 – Was there any inventory quantity for the item at the receiving warehouse before the transfer?

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Steve Carter
PCS Senior Consultant
Blue Horseshoe
Carmel IN
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